Asos share price in focus after £75m cash call
Asos has tapped shareholders for £75m as the loss making retailer attempts to repair its balance sheet.
The pure-play digital retailer revealed the plans to investors yesterday, with the fundraising underwritten by three shareholders including Danish billionaire Anders Povlsen, the owner of Bestseller through his investment vehicle.
In a separate cash building move, Asos also launched a retail offer of up to £5m in new ordinary shares, with the offer made using capital markets platform PrimaryBid.
The firm confirmed the move in a statement to markets this morning.
Markets gave the move a cautious welcome, with shares up just more than 2 per cent in early trading.
“Free cash flow and net debt have been on the rise, so grasping the nettle and securing new finance is the right way to go, albeit it may be seen as evidence of just how tough the trading environment is,”Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said.
Asos was once the poster child of pandemic success as shoppers stuck at home splurged their disposable income on its loungewear and fast fashion goods, however since the high street reopened the company has struggled – posting a £87.4m loss in its most recent financial results.
In the background, efforts to turn around the retailer are being made by Asos chief José Antonio Ramos Calamonte, who last year launched a “driving change” initiative to repair the group’s finances – which include reduced markdowns and enacting a discipline on “marketing spend”.
“Asos is in a very tricky spot in the current climate, it’s clothes aren’t luxury enough to be defensive, and they aren’t cheap enough to entice bargain hunters,”Lund-Yates added.